The Homer Ferrington gas drilling rig, operated by Noble Energy and drilling in an offshore block on concession from the Cypriot government, is seen during President Demetris Christofias' visit in the east Mediterranean, Nicosia November 21, 2011. (photo by REUTERS/Handout)

US Fears new Lebanon-Israel Tensions over Hydrocarbons

Author: assafirPosted February 11, 2012

The US has a new policy towards Lebanon, after the discovery of oil and gas resources on the shores of the Mediterranean. It is not a radical policy change, but it signals the introduction of a new dimension [to Israeli-Lebanese relations], and a more important focus on stability.

Summary⎙ Print Lebanon and Israel are attracting new attention from the US Administration and American companies following the discovery of gas along their shared coastline. The potential revenues from extraction adds new impetus to calls for regional stability, Joe Maakaroun reports.

The Levant Basin, with an area of 83,000 kilometers squared, includes Lebanon, Syria, Cyprus, Israel and the Gaza Strip. The US Geological Survey estimates that this basin holds 1.7 billion barrels of extractable oil, and 122 trillion cubic feet of gas. Chris Schenk, the person in charge of the US Geological Survey assessment of oil and gas reserves in the Levant Basin, told Al-Safir that the agency recently surveyed 150 basins “that could be considered as of primary [importance] around the world.” The Levant Basin was included in the list, especially on account of its gas reserves. Chris Schenk stressed that the agency is part of the US Government. Therefore, it is not allowed to specify each country’s share of these resources because “there is no final maritime border line” [i.e. maritime borders between the countries of the Levant Basin have yet to be firmly established].

Mr. Schenk continued, “We support the right of all states to establish a legal framework for oil and gas exploration. The possibility of finding these resources in the Mediterranean Basin will be a positive development for Lebanon’s energy security.” The US official explained, “While the Lebanese Government is waiting to start prospecting for hydrocarbons, we encourage it to enter into open dialogue with energy companies, NGOs, and other parties to ensure that natural resources are exploited in a sustainable manner, and used for to benefit the Lebanese people.”

Lebanon went through a bout of diplomatic confusion [between] July and October of 2010, when it submitted geographic coordinates [for its proposed maritime border delineations] to the UN, before backing down in November. This was followed by the ratification by Cyprus and Israel of their own maritime border agreement in February 2011. Lebanon rejected this agreement in a letter to the UN, sent in June [2011], because this border agreement infringed on Lebanon’s own territorial waters. Meanwhile, Lebanon and Cyprus are holding talks to review their common agreement and remove articles that conflict with Lebanon’s interests, taking into account that the Lebanese Parliament did not ratify the maritime [border] agreement [signed] by the two countries in 2007.

In September of last year, Lebanon sent a letter to the UN complaining that Israel encroached on 860 square kilometers of Lebanese waters in response to the geographic coordinates that Israel sent to the UN in July 2011. That month, Israeli newspaper Haaretz reported that US State Department official Fred Hoff was following up on this issue and asked for the cooperation of Israeli officials in the delineation of maritime borders with Lebanon. Mr. Hoff told Al-Safir that the US has not taken any position on the conflicting demands of Lebanon and Israel regarding their Exclusive Economic Zones. These zones are governed by the Law of the Seas, [and within them a sovereign state holds exclusive rights] to explore and use maritime resources, including energy. The [US Geological Survey] official stressed that “these conflicting demands should not be used as a pretext for renewed conflict.” He encouraged both parties “to solve their difference through negotiations, and reach a solution that allows both sides to exploit the offshore resource profitably.”

A researcher at the Center for Strategic and International Studies and former official at the Energy and State Departments in Washington, Alan Hegburg, told Al-Safir that “there is always a way to hold negotiations outside a political framework, if both sides desire it.” He explained that the US previously tried to encourage border arrangements for gas exploration in the region, but these efforts were not successful. He added, “the US supported such efforts in the past, and I believe it would do so in the future.”

Lebanese Government decree number 6433, issued in 2011, states in its third paragraph: “The [boundaries of the] Exclusive Economic Zone can be reviewed and improved. Therefore, its geographical coordinates can be amended when needed and when more accurate data can be collected, in view of negotiations with neighboring countries.” This means that the Lebanese Government has left the door open for possible negotiations. However, according to US and Lebanese Government sources that Al-Safir talked to, there are currently no mediators working on this issue. However, the Lebanese side “welcomes a US role if it is needed” and Washington does not mind playing the role of a facilitator if needed. The US values the exploration project in Lebanon and is following its progress. The US is asking all sides in the region to calmly deal with this issue, without transforming it into a major problem, because many countries throughout the world have similar issues.

Currently, the Lebanese position during 2012 consists of exploring for oil in undisputed areas. Additionally, the government considers that “historically, Israel has tended to create buffer zones in the territories of its neighbors.” Sources close to Prime Minister Najib Mikati said, “There are efforts to resolve this issue through diplomatic and legal channels. If these fail, then anything can happen!” Energy Minister Gebran Bassil told Al-Safir that the border issue is “not open to discussion” and that “there is nothing to negotiate about.” He added, “Cyprus made a mistake and it is rectifying it” pointing out that the US position on the maritime border issue with Israel is “positive.”

Problems could arise if Israel exercises the “right of acquisition”, [meaning that] whoever reaches the resources first controls them. Such a course of action could jeopardize [Lebanon’s share of] the natural reserves and heighten tensions. Moreover, Israel did not sign the UN Convention on the Law of the Seas (Lebanon signed it in 1995). Therefore, the situation requires negotiations between the Israeli and Lebanese sides through the UN, similar to the Blue Line negotiations [over land borders] in 2000. The United Nations Interim Force in Lebanon [UNIFIL] offered to assist in the demarcation of maritime borders last July, during a tripartite meeting with the Lebanese and Israeli sides. However, such a solution is not likely, and neither is an international arbitration that would require the agreement of both sides. Nevertheless, all side are acting pragmatically because of the high stakes of these oil explorations.

The Lebanese Government wants to demarcate its maritime border and is worried about upsetting the balance [established by] UN Security Council Resolution 1701 [which ended the 2006 July War between Israel and Hezbollah and established the mandate for the second deployment of UNIFIL in South Lebanon]. Meanwhile, Israel requires an agreement or full negotiations on the entire border as a condition of accepting the Lebanese proposal. The US is arguing that the gas reserves in Lebanese territorial waters [are already substantial] and Lebanon should benefit from these [reserves, instead of getting involved in a dispute over maritime borders]. Israel, [according the the US,] should do the same inside its own borders. In this case, there would be no need for the two sides to clash over the border issue. Considering that Lebanon refuses any direct negotiations with Israel [on this issue], and that US officials refuse the extended discussion of negotiations, the Lebanese are waiting for the situation to be clarified so as to open the door to US facilitation and the achievement of a settlement through the UN or UNIFIL.

Of course, the US priority is the regional stability and the protection of US companies that are working in oil exploration in Israel and Cyprus, specifically the Noble Energy company. Noble Energy discovered the gas reserves 130 kilometers off Haifa’s shores in December 2010. The US Ambassador to Israel, Dan Shapiro, visited the Solitaire ship on October 18, 2011, which is laying the pipelines that would pump gas through the sea. The ambassador stressed the importance of this project for Israel’s economy and US-Israeli economic relations. Noble Energy has been respecting Lebanese borders, exploring for gas 38 kilometers away from them. The company even sent messages to the Lebanese Government saying that it will not cross these borders and that it is interested in cooperating, investing in and exploring Lebanese waters.

The US Administration communicated with the Lebanese Oil Ministry concerning this issue via the US Embassy and officials [in Lebanon]. Four US energy companies are interested in exploration in Lebanon. These companies bought the survey information and some of their representatives met the Lebanese Energy Minister. The tender [process] is going to be announced after the formation of a managing authority to supervise this sector and issue the necessary decrees. The Lebanese Energy Minister said to Al-Safir, “my message to US companies is: our doors are open to you as they are to others, because it is in Lebanon’s economic and political interest to open [investment in] the oil [sector] to the entire world.”

For Lebanon, this issue might be a chance to transform the structure of its economy. According to the US [Geological Survey] agency, Lebanon imported around US $2.1 billion in oil products in 2005, which amounts to more than 22% of its revenues[...]with an increasing public debt that has [now] topped $50 billion US. Hegburg said that successful exploration in Lebanon would mean that “[the country] would become more secure in terms of energy. Lebanon would no longer need to depend on oil or gas imports from other countries or wait for other governments’ decisions on whether to provide it with energy or not.” Hegburg considered that in Lebanon’s case “ it is not an important issue - perhaps domestically, but [at a global level] Lebanon is not a major oil consumer.”

Every trillion cubic feet of gas costs around $12 billion. Thus, Lebanon’s wealth could exceed $300 billion in a period of 50 to 60 years. The financial revenues would depend on the final estimates of Lebanon’s share of the total gas reserves in the Levant Basin. Would this natural wealth cause a new border conflict, or be another chance to waste Lebanon’s resources? Or would this newly-discovered wealth [instead] offer the possibility of building a productive economy which provides [for its citizens] and a state that offers new job opportunities, unburdened by debt?

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